By Alison Bennett, Aaron E. Lorenzo and Kaustuv BasuJuly 1 — Thousands of U.S. businesses and taxpayers are raising their voices to support the Treasury Department's controversial rules to stop companies from stripping income out of the U.S., in sharp contrast to the growing pressure from multinational corporations to drop the rules.Just days ahead of a July 6 meeting between Treasury officials and lawmakers and a July 7 comment deadline, the Main Street Alliance and Americans for Tax Fairness are urging the government not only to keep the rules as proposed, but to expand their reach.Even more action is needed to preserve critical tax dollars and help small businesses and other U.S.-based companies compete, the two organizations said.Rare SupportTheir voices come as rare support for the rules (REG-108060-15), which have drawn vigorous attacks as causing harm to multinational companies across a wide range of industries, including manufacturing and technology. Proposed in April under tax code Section 385, the rules are designed to keep these companies from shifting income out of the U.S. through loans to subsidiaries (65 DTR GG-1, 4/5/16).The rules would give the IRS the ability to recast entire loans as equity instead of tax-favored debt, causing deductions on loan interest payments to vanish and potentially saddling companies with hefty withholding taxes. They also allow IRS examiners to bifurcate loans so part would be considered equity and part debt.Treasury has resisted intense pressure to extend the July 7 comment deadline, with a July 14 IRS hearing to follow. The outcry against the rules has reached Capitol Hill, where key Treasury officials are expected to meet with lawmakers July 6 to discuss the guidance.Leveling Playing FieldThe Main Street Alliance said in June 29 comments that the proposed earnings-stripping rules would “help level the playing field for job-producing, tax-paying small businesses.” The rules are needed, the group said, because “the U.S. Congress has failed to act to stem the tide of inversions.”In submitting nearly 30,000 letters to the IRS in support of the rules, Americans for Tax Fairness Executive Director Frank Clemente said the rules would eliminate an array of “manipulative financial arrangements multinational companies use to dodge paying their fair share of U.S. taxes, such as earnings stripping.”He was joined in submitting the letters by Chris Bowers, executive campaign director for the Daily Kos, a liberal political blog that garnered support from its members to press the government to expand the rules before they are finalized.Criticism From S&P GlobalAs an example of pressure from big companies, S&P Global, a major company in New York that provides credit ratings and other financial data to corporations all over the world, told Treasury in recent comments that the rules raise the specter of double taxation and big administrative burdens.The clash of opinions on the rules is only expected to increase as the deadline for comments draws near, with Treasury remaining firm on the date comments are due.Capitol Hill ScrutinyRepublican tax writers, including Sen. Rob Portman (R-Ohio), say they favor minutely reexamining the Section 385 regulations.Portman said he was disappointed by Treasury’s decision not to push back the comment deadline. “I’m disappointed they are not moving the date. I think the more we learn about it, the more concerns are being expressed,” Portman said. “I’m hearing from companies that had no idea they were going to be affected because they are not companies involved with inversions.”“What we want is for people to repatriate their earnings so that we can invest more in jobs and plants and equipment here. What companies are telling me is this would actually lead them to keep more money overseas because this recharacterizes equity,” Portman said.Measured Approach in SenateStill, Portman and his colleagues in the Senate Finance Committee have taken a more measured approach to the regulations than their House colleagues, who have been more vociferous in their opposition. Ways and Means Republicans and Democrats have fired off letters to Treasury with their concerns.